United States District Court, E.D. Virginia, Alexandria Division
M. Brinkema United States District Judge
the Court is the magistrate judge's Report and
Recommendation [Dkt. No. 196] (the "Report")
recommending an entry of default against defendants Carla
DeSilva McPhun ("McPhun") and Cadem Capital Group
("Cadem") (collectively, the "McPhun
Defendants"). The McPhun Defendants have objected to the
Report. For the reasons that follow, the Court will adopt the
Report in full and direct the Clerk to enter default against
the McPhun Defendants.
McDonald ("McDonald") and McDHoldings, LLC
("MCDH") (collectively, "plaintiffs")
initiated this civil action in June 2018, claiming that they
had been victims of a fraudulent scheme involving sham real
estate investments. They named as defendants the McPhun
Defendants as well as Edward G. Robinson III
("Robinson"), Edward G. Robinson III Consulting,
LLC ("EGIII"), Choice Management, LLC
("Choice"), and Christian E. D'Andrade
("D'Andrade"). One by one, most of the
defendants have defaulted or have been dismissed from the
case. The Clerk entered defaults as to Choice and
D'Andrade in October 2018 [Dkt. Nos. 91 and 92], and the
Court granted plaintiffs' motion to dismiss all claims
against Robinson and EGIII in December 2018 [Dkt. No. 179],
leaving only McPhun and Cadem, which is the real estate
investment trade name of which McPhun is the sole proprietor.
April 2018, one of McPhun's business associates, Keisha
L. Williams ("Williams"), was indicted for wire
fraud in violation of 18 U.S.C. § 1343 and money
laundering in violation of 18 U.S.C.§
1957. See United States v. Williams.
No. 1:18-cr-160 (E.D. Va. Apr. 11, 2018). Williams had
masterminded a complex fraudulent scheme that continued for
over three years and that ultimately resulted in her victims
losing over $5.4 million. In September 2018, less than a
month before Williams's trial was set to begin, the
Government charged both McPhun and D'Andrade with wire
fraud in connection with Williams's scheme. United
States v. McPhun. No. 1:18-cr-333 (E.D. Va. Sept. 17,
2018); United States v. D'Andrade. No.
1:18-cr-332 (E.D. Va. Sept. 19, 2018). McPhun and
D'Andrade negotiated plea bargains with the Government
and agreed to testify at Williams's trial. As a result of
her guilty plea, McPhun was convicted, sentenced to two
years' supervised probation, and ordered to pay the
mandatory $100 special assessment as well as $433, 000 in
restitution to victims. D'Andrade, in turn, was sentenced
to three years' supervised probation and was ordered to
pay the $100 special assessment along with $2, 281, 239 to
plaintiffs claim to have been victims of Williams's
scheme, they did not name her as a defendant and were not
identified as victims in any of the criminal prosecutions of
Williams, McPhun, or D'Andrade. Instead, plaintiffs moved
for orders of restitution before McPhun and D'Andrade
were sentenced. Neither McDonald nor MCDH was included as a
victim in McPhun's restitution order, although
D'Andrade's restitution order provides that MCDH is
entitled to recover $68, 000 from
to this civil action, plaintiffs served the McPhun Defendants
with process in July 2018 [Dkt. Nos. 6 and 8], and shortly
thereafter attorney Laura Golden Liff ("Liff') of
Miles & Stockbridge P.C. entered an appearance on their
behalf [Dkt. No. 14]. The McPhun Defendants sought and were
granted a two-week extension of time in which to file a
responsive pleading [Dkt. No. 18], after which they timely
filed a motion to dismiss for lack of personal jurisdiction
[Dkt. No. 26]. They subsequently moved to dismiss for failure
to state a claim [Dkt. No. 37] and withdrew their prior
motion [Dkt. No. 49]. The motion was denied on September 7,
2018 [Dkt. No. 63], and the case proceeded to discovery.
September 14, 2018, Liff moved to withdraw her appearance as
counsel for the McPhun Defendants [Dkt. No. 67], explaining
that the McPhun Defendants had "failed to substantially
fulfill an obligation" to her and that "continuing
to represent [them would] result in an unreasonable financial
burden" [Dkt. No. 68]. The motion was granted three days
later [Dkt. No. 70]. From that point onward, McPhun has
represented herself and Cadem pro se.
McPhun Defendants have repeatedly failed to comply with
discovery rules, deadlines, and the magistrate judge's
orders. On October 19, 2018, plaintiffs moved to compel the
McPhun Defendants to make their initial disclosures under
Federal Rule of Civil Procedure 26(a)(1) and to supplement or
correct their answer to plaintiffs' complaint [Dkt. No.
109]. The magistrate judge held a hearing on plaintiffs'
motion to compel on November 2, 2018, at which McPhun did not
appear [Dkt. No. 126]. The magistrate judge granted
plaintiffs' motion and ordered the McPhun Defendants to
make their initial disclosures and supplement or correct
their answer "with truthful, accurate, and complete
statements" no later than close of business on November
8, 2018 [Dkt. No. 128]. The Order also warned the McPhun
Defendants that failure to comply with the Order's terms
"may result in sanctions, including the Court entering
default judgment against them."
McPhun Defendants did not comply with the Order. As a result,
on November 9, 2018, plaintiffs moved for sanctions and an
entry of default against the McPhun Defendants [Dkt. No.
150]. Plaintiffs noticed a hearing on their motion for
November 16, 2018, but McPhun again failed to appear [Dkt.
No. 158]. Accordingly, the magistrate judge ordered the
McPhun Defendants to appear before her on November 30, 2018
"to show cause why the Court should not enter default
judgment against them" [Dkt. No. 159]. McPhun again
failed to appear at the show cause hearing, and the
magistrate judge indicated she would take plaintiffs'
motion under advisement and recommend an entry of default
against the McPhun Defendants as a sanction under Federal
Rule of Civil Procedure 37.
December 10, 2018, McPhun was sentenced by this Court for her
involvement with the Williams case. An explicit condition of
the probationary sentence McPhun received was that she would
"respond to all legitimate discovery requests and court
orders in the related civil case." McPhun. No.
1:18-cr-331 (E.D. Va. Dec. 10, 2018).
December 13, 2018, plaintiffs moved for default judgment
against the McPhun Defendants as well as Choice and
D'Andrade [Dkt. No. 184]. The following day, McPhun
responded to plaintiffs' motion for default judgment and
requested an extension of time to comply with the magistrate
judge's orders [Dkt. Nos. 189 and 190]. McPhun explained
that she "ha[d] been functioning in a state of
duress" due to the criminal prosecution as well as
various health issues in her family and that as a result
"[i]t ha[d] been difficult for [her] to keep up."
She also claimed that although she had received electronic
notice of all new docket entries since late September 2018,
she had been unable to view any of the documents or filings
but had since received training from the Clerk's office
that "walked [her] through" how to access those
documents. Finally, she argued that she had lacked a
"proper understanding" of the terms "in
portions of Plaintiffs['] filings" and had
mistakenly thought that her discovery obligations had ceased
after she retained counsel in mid-November in hopes of
reaching a settlement with plaintiffs. In response, the
magistrate judge ordered the McPhun Defendants to appear for
another show-cause hearing on December 21, 2018 [Dkt. No.
magistrate judge held a hearing on December 21, but once
again McPhun failed to appear, and no other representative
appeared on behalf of the McPhun Defendants [Dkt. No. 194].
Accordingly, the magistrate judge issued an order in which
she denied the McPhun Defendants' motion for an extension
of time, took plaintiffs' motion for default judgment
under advisement, stayed further discovery in the case, and
prohibited the McPhun Defendants from "supporting or
opposing any claims or defenses as well as introducing any
evidence at trial" under Federal Rule of Civil Procedure
37(b)(2)(A)(ii) [Dkt. No. 195]. Five days later, the
magistrate judge issued the Report at issue here [Dkt. No.
196], in which she detailed the foregoing and recommended
sanctions in the form of an entry of default.
McPhun Defendants have filed an objection to the magistrate
judge's Report. McPhun principally attributes the McPhun
Defendants' failures to comply with deadlines and the
magistrate judge's orders to her pro se status,
stating that she lacks "full knowledge and etiquette of
the law" and that "it is overwhelming to manage
this case without legal assistance." McPhun denies
willfully disregarding the magistrate judge's orders,
insisting that any "neglect resulted from lack of legal
knowledge, practices and procedures." With respect to
not attending the December 21 hearing, McPhun claims that she
"missed" the electronic notification of the hearing
date and did not learn of the hearing ...